SWISS International Air Lines AG Turnaround and Outlook Marcel Klaus CFO

Transcription

1 SWISS International Air Lines AG Turnaround and Outlook Marcel Klaus CFO January 25th, 2007

2 0 Content Swiss at a glance Turnaround of Swiss Outlook & Future Activities 2

3 1 Swiss at a glance 3

4 1 European network: 47 destinations in 22 countries Hub CH ARN DME BSL GVA ZRH LUG DUB MAN BHX LCY LHR CDG CPH HAM AMS TXL/THF HAJ BRU DUS LUX NUE FRA PRG WAW STR MUC VIE BUD LIS MAD BCN NCE MXP FCO BEG OTP AGP ALC PMI SKG IST ATH 4

5 1 Intercontinental network: 27 destinations in 19 countries North America Destinations: 7 LAX ORD MIA YUL BOS JFK/EWR TIP BEN CAI DLA SSG NSI TLV RUH JED NBO DAR MCT DXB BOM Middle East Destinations: 5 BKK HKG SIN NRT India/Far East Destinations: 5 South America Destinations: 2 SCL GRU JNB Africa Destinations: 9 5

6 1 Swiss International Air Lines Ltd is Switzerlands airline Status as of The company comprises the following business segments: Scheduled Services Charter Cargo Technical Services Third Party (Regional A/C) Others Revenue 2006 (as of in CHFM) EBIT (as of ) 199 Key figures AC ASK (mio) RPK (mio) SLF PAX (mio) est %

7 2 Turnaround of Swiss 7

8 2 EBIT Development of the past years Q

9 2 I. / II. Stop Cash Drain and Reduce Overhead immediately Stop cash drain, secure new funding and preservation of liquidity (Stop nearly all Capital Expenditure; Re-negotiate payment terms; sell surplus assets) Reduce overhead costs and personnel Personnel have been reduced by 2000 FTE (45%) FTE Overhaed. Ops Cargo MRO Netw/ Mkt Sales Sales Network /Marketing Technic Cargo OpS OvH 9

10 2 III. Improve Asset Utilisation and reduce operating Personnel Improve earning capacity by optimising fleet structure Heterogeneous fleet structure has been streamlined by selling Regional Aircraft Building a homogenous fleet - currently in commercial service only ARJ / A320 family & A330/A340 are flown, all surplus A/Cs are sold apart from 5EJ145 (Embraers are leased out) Reduce operating personnel in line with fleet size, improve productivity (Cockpit and Cabin Personell Reduction by 50%) A/C Type 2002 S S Embraer RJ 85 / MD MD A 320 Family 27 A A Total 153 Total fleet including sub leased aircraft (5)

11 2 IV. Improve Network, Sales and Pricing Activities Integration into Lufthansa Group / Star Alliance supports positive Yield Development 130% Yield (RRPK) Ø +4.6% 120% 115% Network harmonisation Improved neighbourhood traffic Optimisation intercont routing 110% 100% 90% 107% 100% 103% Frequent Flyer Programme 85% Load Factor 80% 76% 78% 75% 71% 73% 70% 65% 60%

12 2 V. Continuous Cost Cutting / Unit Cost change YoY 70% 61% 2004/ /2006 (e) 50% 30% YoY change % 10% Mainly reintroduce EU catering 7% Fleet mix & change of depreciation method to LH standard 12% -10% -11% -10% -8% -3% -8% -30% -26% -20% Baseline always % -70% Fuel/Tonne VarTechnics/AFH Cabin/ABH Scheduled Services only source LX RIS Cockpit/ABH Ground&Land/Seat Inflight/LegPax ATC/ASK Comm&Res/SegPax Insurance/ASK -67% Aircraft/ABH FixOH/ASK 12

13 3 Outlook & Future Activities 13

14 first year in Swiss history with a positive result Group EBIT CHFM Q est Mid-term Target EBIT Margin 5-8% -600 Total Cash (in CHFM) Operating Cash generated in 2006 (in CHFM) % of Assets represented by AC Equity Ratio 3rd Quarter % 26.2% 14

15 3 Snapshot on Swiss Cost Structure (as of ) Cost Structure Cost of materials 35% thereof Fuel 23% Cost of services 33% Personnel expenses 17% Others incl. Depreciation 10% thereof Operating Leases 4% Depreciation 5% Total Cost (within EBIT) 100% 15

16 3 Swiss key Balance Sheet figures Owned and leased Aircraft sum up to a book value of 1400 mio. CHF Cash of 800 mio. CHF A net assets of approx. 250 mio. CHF Employee benefit liabilities of about 50 mio. CHF (IFRS 19) 16

17 Fleet ageing Regional Fleet Airbus Cont Fleet Airbus Intercont Fleet Ø 9.6 years Ø 8.8 years Ø 5.3 years RJ Airbus A A Airbus A 320 (fam) + 3 Airbus A 340 (2 for A330 maintenance cover) Ø-Growth rate 2006 / 2009 = 7.5% ASK

18 3 Planned Product enhancements A319 / A 321 new seats as already introduced on A320 with increased capacity New / improved Lounges in ZRH and GVA (especially Premium Segment) Improved services for First Class and HON Passengers on Ground Usage of strength through integration into LH and STAR Alliance (FFP/Groundhandling/ Sales) 18

19 3 Positive Development of other Business Segments Cargo: MRO: Swiss World Cargo using belly capacity only is positioned as high yield niche market provider, with special products like X-presso (Fast), Valuables (Secure); Celsius (Temperature). Loadfactor of ~ 85% (IC Flights) Further integration into LH-Cargo Products. Sales Agent for JADE (Joint venture LH), Providing maintenance for regional A/C as well as engineering maintenance for Airbus fleet. Increase third party business. 19

20 3 Further Cost reductions are planned & on track New Collective Labour Agreements - Cabin Crews: Productivity increase ~ 10% due to new FDR, moderate salary increase by 1.1% - Cockpit Crews: Productivity increase ~ 10% - Ground: Moderate salary increase by 1.1% and onetime payment of 1200 CHF Unit Cost decrease due to new supplier contracts & further synergies out of integration into LH - Gate Gourmet - Swissport - Various new agreements for Airport Handling (together with LH) 20

21 3 Swiss to increase market perception by using strength and profit from future opportunities Home-carrier, strong brand, 360 network, best offer out of CH, charter offer Solid customer portfolio in all channels Largest Frequent Flyer Program, Star Alliance Experience / market leader Competitive pricing model Local service (e.g. 3 language culture) Network enhancement Fleet enhancement Alternative distribution channels Further development of E-environment to increase share of direct sales Strong PR 21

22 22

23 Disclaimer This presentation is for informational purposes only, contains preliminary financial and other information about Lufthansa and is subject to updating, revision, amendment and completion. This presentation does not and is not intended to constitute or contain any offer of securities for sale or a solicitation of an offer to purchase any securities of Deutsche Lufthansa AG or any other company and neither this presentation nor anything contained herein shall form the basis of any contract or commitment. Certain statements contained in this presentation may be statements of future expectations and other forward-looking statements or trend information that are based on management's current views and assumptions and involve known and unknown risks and uncertainties. In addition to statements which are forward-looking by reason of context, including without limitation, statements referring to risk limitations, operational profitability, financial strength, performance targets, profitable growth opportunities, and risk adequate pricing, as well as the words "may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, or continue", "potential, future, or further", and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements. Lufthansa assumes no obligation to update any such statements or any other information contained herein. 23